Miller Company has recently been acquiring small to medium-sized printing firms around the country. The goal is to become the low-cost provider of graphic arts and printing services. Cost control is important and Miller Company uses a standard costing system for all the printing plants. Some of the smaller printing firms that have been acquired have not used a standard costing system. One of the important jobs for Miller Company is to evaluate the printing operations when a new printing plant has been acquired and set standards for the printing presses.
Sharon Company was a recent acquisition. The current four color press used by Sharon Company is five years old and 40 inches in very good condition. The press should be able to produce 10,000 impressions per hour under ideal conditions as set forth by the manufacturer of the press. Miller Company has set standards at 9,000 impressions per hour for similar presses. Some of the smaller jobs for Sharon Company, which make up a majority of the business, are stopped frequently in order to allow the press operator to set up new jobs. Also, jobs that Sharon Company obtains are very complex and need high-quality results. Sharon Company estimates that under normal conditions, the expectations would be 8,000 impressions per hour for the presses.
Miller Company performed a time study of the productivity of the operators over a six month period with the new acquisition and the results are:
Press Operator Average Impressions per Hour
A Jones 6,800
B East 5,700
C North 7,400
D South 6,100
E West 6,500
Overall Average 6,500
- Miller Company is considering setting 10,000, 9,000, 8,000, 7,400 or 6,500 impressions per hour for the press standard as possibilities. Discuss how appropriate each standard would be and include a list of pros and cons for each possibility.
- Discuss the qualitative factors that Miller Company should consider when setting a standard for the same press model throughout the company.
- What level would you choose for the press standard for Sharon Miller and explain why you would choose that particular level.
Prepare a two page report which answers parts a, b and c. The report should be prepared using APA guidelines and include a title and reference page. All references should be from credible sources. Wikipedia is not a credible source.
Grading Rubric – Total Points 65
Provided the appropriateness, pros and cons of press levels (part a) 15 points
Provided the qualitative factors for press standard (part b) 15 points
Provided a recommended level for Montreal (part c) 15 points
Prepared paper according to APA guidelines 10 points
Report met the required page length 5 points
Memo free of spelling and grammar errors 5 points